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Integrated Financial Holdings, Inc. Third Quarter 2022 Financial Results

RALEIGH, N.C., Oct. 28, 2022 (GLOBE NEWSWIRE) -- Integrated Financial Holdings, Inc. (OTCQX: IFHI) (the “Company” or “IFHI”), the financial holding company for West Town Bank & Trust (the “Bank”), released its financial results for the three months and nine months ended September 30, 2022. Highlights from the 2022 third quarter and year-to-date results include the following:

  • Third quarter net loss of $7.5 million or $3.31 per diluted share, compared to third quarter 2021 net income of $2.9 million or $1.32 per diluted share. The 2022 third quarter was materially impacted by a $10.0 million litigation expense, as previously disclosed in the Company’s second quarter earnings release. Year-to-date net loss was $2.6 million or ($1.14) per diluted share compared to $11.4 million in net income or $5.15 per diluted share in the prior year.
  • Net interest income of $5.7 million for the third quarter of 2022, compared to $4.3 million for the same period in 2021. For the year, net interest income was $16.0 million compared to $12.2 million for the same nine-month period in 2021.
  • Return on average assets of (6.97)% and (0.79)% for the three and nine-month periods ending September 30, 2022 compared to 2.61% and 3.63%, respectively for the same periods in 2021.
  • Return on average tangible common equity (a non-GAAP financial measure) of (43.36)% and (4.86)% for the three and nine-month periods ending September 30, 2022 compared to 17.70% and 24.71%, respectively for the same periods in 2021.

Eric Bergevin, President and CEO of the Company said, “The settlement expense associated with our decision to resolve the RESPA Litigation obviously impacted our 2022 third quarter and year-to-date results. However, putting aside this extraordinary expense item, we saw a lot of positive momentum in our core government-guaranteed lending business segment.  We saw all-time highs for government-guaranteed loan closings, exceeding $100 million for the quarter and seeing the pipeline bump over $500 million, mostly focused on renewable energy projects.  Renewable energy projects have been, and we expect will continue to be, a focus of ours going forward.  In that regard, we are excited about some of the opportunities we anticipate from our pending merger with MVB Financial Corp. that was announced during the third quarter.  Due to the size of some of these renewable energy projects, we expect that the larger balance sheet offered by our proposed strategic partnership with MVB would allow us to retain a larger portion of the economic benefits from these projects, rather than participating out portions of the loans.  As we look ahead to year-end, we are focused on strategic initiatives that we expect will bring renewed focus on our core strength of government-guaranteed lending, enhancing our pipeline and being accretive to long-term earnings.  We have already begun, and will continue to take prudent cost-savings measures, as we respond to reduced activity in our historical mortgage operations in light of the interest-rate environment and look to maximize shareholder value with respect to some of our non-core business lines.”

BALANCE SHEET
On September 30, 2022, the Company’s total assets were $437.4 million, net loans held for investment were $288.7 million, loans held for sale (“HFS”) were $28.4 million, total deposits were $325.1 million and total shareholders’ equity attributable to IFHI was $84.3 million. Compared with December 31, 2021, total assets decreased $15.5 million or 3%, net loans held for investment increased $34.6 million or 14%, HFS loans increased $519,000 or 2%, total deposits decreased $23.0 million or 7%, and total shareholders’ equity attributable to IFHI decreased $4.3 million or 5%. Cash and cash equivalents increased slightly from the prior quarter but have decreased since year end as the Company has redeployed cash into higher yielding loans. The Bank has continued to see strong growth in loans held for investment primarily as a result of the retained portion of the loan pipeline for the Government Guaranteed Lending (“GGL”) type loans. At $28.4 million in volume, HFS loans at September 30, 2022 represents significant potential future GGL revenues as those loans are sold in the market and the associated premiums are recognized. Noninterest bearing deposits increased $22.7 million from the prior quarter but are down $8.0 million since the prior year-end, in part, as a result of some ongoing merger and acquisition activity in one of the targeted industries that the Company banks.   The decrease in total shareholders’ equity since year-end 2021 was primarily a result of the net loss posted for the nine-month period ended September 30, 2022.

CAPITAL LEVELS
At September 30, 2022, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.

 "Well Capitalized"
Minimum
Basel III Fully
Phased-In
West Town
Bank & Trust
Tier 1 common equity ratio6.50%7.00%12.12%
Tier 1 risk-based capital ratio8.00%8.50%12.12%
Total risk-based capital ratio10.00%10.50%13.38%
Tier 1 leverage ratio5.00%4.00%10.91%
    

As a result of the loss driven by the litigation settlement, the Company’s book value per common share decreased from $39.74 as of September 30, 2021, to $37.29 at September 30, 2022. The Company’s tangible book value per common share (a non-GAAP financial measure) also decreased from $30.76 as of September 30, 2021, to $28.88 at September 30, 2022, primarily as a result of the net loss of the Company.

ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 1.65% at December 31, 2021, to 1.05% at September 30, 2022, as management continued to aggressively work to reduce its special assets portfolio. Nonaccrual loans at September 30, 2022 decreased $2.2 million or 33% as compared to December 31, 2021. The Bank held no foreclosed assets as of September 30, 2022.

The Company recorded $320,000 and $960,000 in provision for loan losses during the three and nine-months periods ending September 30, 2022, respectively, as compared to provisions of $500,000 and $1,172,000 for the same periods in 2021 as the size of the loan portfolio increased for those periods. The Company recorded $29,000 in net recoveries during the third quarter of 2022 compared to $325,000 in net charge-offs for the same period in 2021. Management continues to believe it is making progress in improving overall asset quality. Set forth in the table below is certain asset quality information as of the dates indicated:

  (Dollars in thousands)9/30/226/30/223/31/2212/31/219/30/21
Nonaccrual loans$4,612 $4,656 $6,558 $6,848 $7,575 
Foreclosed assets -  -  -  618  618 
90 days past due and still accruing -  -  -  -  - 
Total nonperforming assets$4,612 $4,656 $6,558 $7,466 $8,193 
      
Net charge-offs$(29)$(279)$105 $1,038 $325 
Annualized net charge-offs (rececoveries) to total     
average portfolio loans -0.04% -0.43% 0.16% 1.65% 0.50%
      
Ratio of total nonperforming assets to total assets 1.05% 1.07% 1.52% 1.65% 1.84%
Ratio of total nonperforming loans to total loans, net     
of allowance 1.60% 1.79% 2.56% 2.70% 2.99%
Ratio of total allowance for loan losses to total loans 2.27% 2.39% 2.14% 2.14% 2.24%
                

NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended September 30, 2022, increased $1.4 million or 33% in comparison to the third quarter of 2021 as loan yields increased year over year from 6.92% to 7.55%. The increase in yield from the prior year resulted from a change in loan mix while also reflecting the impact of 300 basis points of rate increases by the Federal Open Market Committee (“FOMC”) since the beginning of 2022 in response to current economic conditions. Overall cost of funds decreased from 0.73% in the third quarter of 2021 to 0.66% for the same period in 2022; however the Company expects to see an upward trend in its costs of funds as average retail certificate of deposit (“CD”) rates trend up and new CDs are originated at a higher market rate. Net interest margin increased from 4.37% during the three months ended September 30, 2021, to 6.22% for the same period in 2022. The increase in margin was also driven by the increase in loan yield resulting from the FOMC actions.

Net interest income for the nine months ended September 30, 2022, increased $3.8 million or 31% in comparison to the same period of 2021 as loan yields increased year over year from 6.52% to 7.39% primarily as a result of the FOMC rate increases during the period.

 Three Months Ended   Year-To-Date
(Dollars in thousands)9/30/226/30/223/31/2212/31/219/30/21 9/30/229/30/21
Average balances:      
Loans$312,475 $319,115 $294,502 $277,510 $272,994  $308,697 $284,620 
Available-for-sale securities 19,096  21,879  21,088  20,367  19,393   20,688  29,576 
Other interest-bearing balances 30,378  33,328  56,359  86,261  93,682   40,022  58,736 
Total interest-earning assets 361,949  374,322  371,949  384,138  386,069   369,407  372,932 
Total assets 428,983  438,732  437,402  442,139  446,822   435,039  421,779 
         
Noninterest-bearing deposits 94,013  85,042  98,546  104,472  103,708   92,534  90,084 
Interest-bearing liabilities:      
Interest-bearing deposits 233,464  244,363  235,092  237,847  240,957   237,640  234,899 
Borrowings 2,174  8,626  6,306  5,272  5,196   5,702  4,794 
Total interest-bearing liabilities 235,638  252,989  241,398  243,119  246,153   243,342  239,693 
Common shareholders' equity 88,043  90,721  90,441  86,549  85,683   89,735  81,969 
Tangible common equity (1) 68,924  71,437  70,939  66,877  65,843   70,433  61,979 
         
Interest income/expense:      
Loans$5,943 $5,491 $5,623 $4,571 $4,759  $17,057 $13,887 
Available-for-sale securities 105  104  89  77  75   298  191 
Interest-bearing balances and other 169  89  42  53  67   300  135 
Total interest income 6,217  5,684  5,754  4,701  4,901   17,655  14,213 
Deposits 532  523  522  566  645   1,577  2,014 
Borrowings 13  15  9  1  -
   37  -
 
Total interest expense 545  538  531  567  645   1,614  2,014 
Net interest income$5,672 $5,146 $5,223 $4,134 $4,256  $16,041 $12,199 
         
(1) See reconciliation of non-GAAP financial measures.


 Three Months Ended Year-To-Date
 9/30/226/30/223/31/2212/31/219/30/21 9/30/229/30/21
Average yields and costs:        
Loans7.55%6.90%7.74%6.53%6.92% 7.39%6.52%
Available-for-sale securities2.20%1.90%1.69%1.51%1.55% 1.92%0.86%
Interest-bearing balances and other2.21%1.07%0.30%0.24%0.28% 1.00%0.31%
Total interest-earning assets6.81%6.09%6.27%4.86%5.04% 6.39%5.10%
Interest-bearing deposits0.90%0.86%0.90%0.94%1.06% 0.89%1.15%
Borrowings2.37%0.70%0.58%0.08%0.00% 0.87%0.00%
Total interest-bearing liabilities0.92%0.85%0.89%0.93%1.04% 0.89%1.12%
Cost of funds0.66%0.64%0.63%0.65%0.73% 0.64%0.82%
Net interest margin6.22%5.51%5.69%4.27%4.37% 5.81%4.37%
                

NONINTEREST INCOME
Noninterest income for the three months ended September 30, 2022, was $5.4 million, a decrease of $3.7 million or 41% as compared to the three months ended September 30, 2021. Specific items to note include:

  • Windsor Advantage, LLC (“Windsor”), a subsidiary of the Company which offers an SBA and USDA loan servicing platform, had processing and servicing revenue totaling $2.2 million, a decrease of $3.8 million or 64% as compared to the $6.0 million in income earned during the same prior-year period. The decrease is almost entirely attributable to $3.7 million in PPP fee related income realized in the third quarter of 2021 compared to no such income in the same period in 2022.
  • Mortgage revenue totaled $477,000, a decrease of $1.1 million or 69% as compared to the third quarter of 2021. Mortgage originations have continued to decline due to rising interest rates. To that effect, mortgage loans originated to sell to the secondary market decreased from $33.2 million in the third quarter 2021 to $20.3 million in the third quarter 2022.   The decrease in both the core mortgage revenue and origination volume can be attributable to the nationwide slowdown in refinancing volume with housing supplies continuing to be an issue along with the impact of a doubling of long-term mortgage rates year-over-year.  
  • Government Guaranteed Lending revenue was $2.2 million in the third quarter of 2022, an increase of $1.6 million or 279% in comparison to the $584,000 of revenues for the same period in 2021.
  • Other noninterest income was $222,000 in the third quarter of 2022 compared to income of $694,000 in the same period in 2021.

Noninterest income for the nine months ended September 30, 2022, was $22.4 million compared to $36.2 million for the same period in 2021, a decrease of $13.7 million or 38%. The decrease is primarily due to a decrease of $13.8 million in loan processing and servicing revenue driven by the decrease in PPP-related revenue during the period. Mortgage revenues during the period decreased $3.3 million due to a general slowdown in the refinancing market but was offset by an increase in other noninterest income of $3.2 million primarily associated with a gain in the market value of marketable equity securities.

NONINTEREST EXPENSE
Noninterest expense for the third quarter of 2022 was $20.9 million, an increase of $12.0 million or 134%, from $8.9 million for the third quarter of 2021.   This change was primarily due to the recognition of a $10.0 million expense during the 2022 third quarter associated with a litigation reserve for a class action lawsuit against the Bank (the “RESPA Litigation”), as previously detailed in the Company’s second quarter earnings release. On August 10, 2022, the Bank agreed to settle the RESPA Litigation for an aggregate sum of $10.0 million, subject to execution of a definitive settlement agreement and court approval. The plaintiffs, plaintiffs’ counsel, and the Bank subsequently executed a definitive settlement agreement dated as of September 7, 2022, for the aggregate sum of $10.0 million. On October 12, 2022, the court issued an order granting preliminary approval of the class action settlement, as reflected in the settlement agreement, and scheduled the final fairness hearing on the settlement for January 18, 2023.

Also contributing to the year-over-year increase in noninterest expense was an increase in compensation expense, which increased from $5.5 million in the third quarter of 2021 to $6.9 million during the same period in 2022. This $1.4 million increase was due to the additional cost of new hires and overall increases in payroll for existing employees. Additionally, the Company incurred $561,000 of merger-related expenses associated with the Company’s proposed merger with MVB Financial Corp. Finally, loan and special asset expenses, which change significantly period over period, increased $836,000 between the third quarter of 2022 and the same period in 2021.   These increases were partially offset by decreases to several expense categories. Software expenses were $460,000, a decrease of $382,000 or 45% in the third quarter of 2022 compared to the same period in 2021. The expense in 2021 included additional costs related to the processing of PPP loans during the period. The decreases in the other noninterest expense categories, including professional services and advertising are primarily related to management’s overall effort to grow profitability.

Noninterest expense for the nine months ended September 30, 2022, was $40.9 million compared to $32.2 million for the same period in 2021, an increase of $8.7 million or 27%.   The primary difference period over period was the $10.0 million litigation expense discussed above.   

ENTRY INTO MERGER AGREEMENT WITH MVB FINANCIAL CORP.  
On August 12, 2022, it was publicly announced that the Company had entered into a definitive merger agreement with MVB Financial Corp. (“MVB”), the holding company for MVB Bank, Inc., a West Virginia state-chartered bank. Under the terms of the merger agreement, which is an all-stock transaction, the Company would be merged with and into MVB, with MVB as the surviving corporation in the proposed merger. The proposed merger is subject to required shareholder and regulatory approvals and the satisfaction of various closing conditions. Readers are also directed to the end of this press release and the section entitled “Additional Information on the Merger and Where to Find it.”

ABOUT INTEGRATED FINANCIAL HOLDINGS, INC.
Integrated Financial Holdings, Inc. is a financial holding company based in Raleigh, North Carolina. The Company is the holding company for West Town Bank & Trust, an Illinois state-chartered bank. West Town Bank & Trust provides banking services through its full-service office located in the greater Chicago area. The Company is also the parent company of Windsor Advantage, LLC, a loan service provider that offers community banks and credit unions with a comprehensive outsourced U.S. Small Business Association (“SBA”) 7(a) and U.S. Department of Agriculture (“USDA”) lending platform. The Company is registered with and supervised by the Federal Reserve. West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC.

For more information, visit https://ifhinc.com/.

Important Note Regarding Forward-Looking Statements
This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company, as well as regarding the announced merger with MVB. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as "expect," "anticipate," "estimate," "believe," variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities or the Company’s planned merger with MVB; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives, including our planned merger with MVB, on our ability to retain key employees; the possibility that the proposed merger with MVB will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; the possibility that the anticipated benefits of the proposed merger with MVB will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Company and MVB do business; adverse results (including judgments, costs, fines, reputational harm, financial settlements and/or other negative effects) from current or future litigation, regulatory proceedings, investigations, or similar matters, or developments related thereto; that costs or estimated liabilities and expenses associated with the RESPA Litigation may be greater than currently estimated, whether due to the court not finally approving the settlement agreement or otherwise; and the impact of competition from traditional or new sources, including non-bank financial service providers, such as Fintechs. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.        

Additional Information on the Merger and Where to Find It

In connection with the proposed merger, MVB will file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”). The registration statement will include a joint proxy statement of MVB and IFHI, which also constitutes a prospectus of MVB, that will be sent to IFHI’s and MVB’s shareholders seeking certain approvals related to the proposed transaction.  

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SECURITY HOLDERS OF IFHI AND MVB AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IFHI, MVB AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed by MVB with the SEC containing information about IFHI and MVB, without charge, at the SEC’s website (http://www.sec.gov). In addition, copies of documents filed with the SEC by MVB will be made available free of charge in the “Investor Relations” section of MVB’s website, https://www.mvbbanking.com, under the heading “SEC Filings;” and investors may obtain free copies of the joint proxy statement/prospectus (when available) by contacting Integrated Financial Holdings, Inc., Attn: Eric J. Bergevin, 8450 Falls of Neuse Road, Suite 202, Raleigh, NC 27615, telephone: (252) 482-4400.

Participants in Solicitation

IFHI, MVB, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding MVB’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 7, 2022, and certain other documents filed by MVB with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.


Consolidated Balance Sheets     
         
    Ending Balance
(In thousands, unaudited)9/30/226/30/223/31/2212/31/219/30/21
Assets     
Cash and due from banks$6,272 $4,700 $3,900 $3,803 $4,452 
Interest-bearing deposits 25,011  21,981  28,876  79,910  83,327 
 Total cash and cash equivalents 31,283  26,681  32,776  83,713  87,779 
Interest-bearing time deposits 1,249  1,499  1,746  1,746  1,996 
Available-for-sale securities 17,460  19,038  20,386  20,659  19,341 
Marketable equity securities 17,982  17,982  18,000  12,000  12,000 
Loans held for sale 28,399  59,592  51,095  27,880  20,610 
Loans held for investment 295,416  266,259  262,281  259,625  259,206 
 Allowance for loan and lease losses (6,710) (6,361) (5,622) (5,547) (5,810)
  Loans held for investment, net 288,706  259,898  256,659  254,078  253,396 
Premises and equipment, net 4,264  4,238  4,235  4,106  4,127 
Foreclosed assets -  -  -  618  618 
Loan servicing assets 3,979  4,178  4,014  3,993  3,830 
Bank-owned life insurance 5,330  5,304  5,271  5,246  5,220 
Accrued interest receivable 2,485  2,139  1,886  1,373  1,508 
Goodwill 13,161  13,161  13,161  13,161  13,161 
Other intangible assets, net 5,848  6,014  6,180  6,400  6,569 
Other assets 17,293  15,764  15,218  18,001  13,954 
   Total assets$437,439 $435,488 $430,627 $452,974 $444,109 
         
Liabilities and Shareholders' Equity     
Liabilities     
Deposits:     
 Noninterest-bearing$106,272 $83,544 $92,499 $114,313 $98,940 
 Interest-bearing 218,835  250,026  233,953  233,842  241,959 
  Total deposits 325,107  333,570  326,452  348,155  340,899 
Borrowings 5,000  -  5,000  7,500  5,000 
Accrued interest payable 370  308  325  326  372 
Other liabilities 23,557  9,939  8,320  9,212  11,130 
 Total liabilities 354,034  343,817  340,097  365,193  357,401 
Shareholders' equity:     
Common stock, voting 2,239  2,227  2,213  2,176  2,176 
Common stock, non-voting 22  22  22  22  22 
Additional paid in capital 24,674  24,498  24,013  23,664  23,515 
Retained earnings 60,248  67,781  66,372  62,810  61,534 
Accumulated other comprehensive income (loss) (2,866) (1,985) (1,296) (99) 65 
 Total IFH, Inc. shareholders' equity 84,317  92,543  91,324  88,573  87,312 
Noncontrolling interest (912) (872) (794) (792) (604)
 Total shareholders' equity 83,405  91,671  90,530  87,781  86,708 
   Total liabilities and shareholders' equity$437,439 $435,488 $430,627 $452,974 $444,109 
         


Consolidated Statements of Income
         
(In thousands except perThree Months Ended Year-To-Date
 share data; unaudited)9/30/226/30/223/31/2212/31/219/30/21 9/30/229/30/21
Interest income        
Loans$5,943 $5,491 $5,623 $4,571 $4,759  $17,057 $13,887 
Available-for-sale securities and other 274  193  131  130  142   598  326 
Total interest income 6,217  5,684  5,754  4,701  4,901   17,655  14,213 
Interest expense        
Interest on deposits 532  523  522  566  645   1,577  2,014 
Interest on borrowings 13  15  9  1  -   37  - 
Total interest expense 545  538  531  567  645   1,614  2,014 
Net interest income 5,672  5,146  5,223  4,134  4,256   16,041  12,199 
Provision for loan losses 320  460  180  775  500   960  1,172 
Noninterest income        
Loan processing and servicing revenue 2,163  2,373  2,207  2,863  5,951   6,743  20,554 
Mortgage 477  1,066  173  1,090  1,537   1,716  5,016 
Government guaranteed lending 2,213  2,767  1,124  2,216  584   6,104  5,721 
SBA documentation preparation fees 78  128  144  167  149   350  824 
Service charges on deposits 182  118  104  85  77   404  158 
Bank-owned life insurance 27  33  25  25  27   85  84 
Other noninterest income (loss) 222  290  6,509  (1,473) 694   7,021  3,798 
Total noninterest income 5,362  6,775  10,286  4,973  9,019   22,423  36,155 
Noninterest expense        
Compensation 6,880  6,271  7,061  6,178  5,462   20,212  17,474 
Occupancy and equipment 402  254  344  254  324   1,000  927 
Loan and special asset expenses 969  491  638  483  133   2,098  1,769 
Professional services 207  491  551  845  732   1,249  1,972 
Data processing 263  271  249  267  196   783  632 
Software 460  426  425  830  842   1,311  5,757 
Communications 86  97  83  99  100   266  297 
Advertising 252  321  214  453  474   787  976 
Amortization of intangibles 170  170  170  170  170   510  528 
Merger related expenses 561  -  -  -  -   561  - 
Other operating expenses 10,683  846  631  754  505   12,160  1,882 
Total noninterest expense 20,933  9,638  10,366  10,333  8,938   40,937  32,214 
Income (loss) before income taxes (10,219) 1,823  4,963  (2,001) 3,837   (3,433) 14,968 
Income tax expense (benefit) (2,646) 492  1,403  (3,090) 1,055   (751) 3,957 
Net income (loss) (7,573) 1,331  3,560  1,089  2,782   (2,682) 11,011 
Noncontrolling interest (40) (78) (2) (187) (155)  (120) (444)
Net income (loss) attributable to IFH, Inc.$ (7,533)$ 1,409 $ 3,562 $ 1,276 $ 2,937  $ (2,562)$ 11,455 
         
Basic earnings (loss) per common share$(3.45)$0.65 $1.65 $0.60 $1.37  $(1.18)$5.31 
Diluted earnings (loss) per common share$(3.31)$0.63 $1.59 $0.57 $1.32  $(1.14)$5.15 
Weighted average common shares outstanding 2,185  2,175  2,159  2,140  2,144   2,273  2,158 
Diluted average common shares outstanding 2,173  2,244  2,242  2,234  2,219   2,254  2,226 
         


Performance Ratios
          
  Three Months Ended Year-To-Date
  9/30/226/30/223/31/2212/31/219/30/21 9/30/229/30/21
PER COMMON SHARE        
 Basic earnings (loss) per common share$(3.45)$0.65 $1.65 $0.60 $1.37  $(1.18)$5.31 
 Diluted earnings (loss) per common share (3.31) 0.63  1.59  0.57  1.32   (1.14) 5.15 
 Book value per common share 37.29  41.15  40.86  40.35  39.74   37.29  39.74 
 Tangible book value per common share (2) 28.88  32.62  32.21  31.44  30.76   28.88  30.76 
          
FINANCIAL RATIOS (ANNUALIZED)        
 Return on average assets -6.97% 1.29% 3.30% 1.14% 2.61%  -0.79% 3.63%
 Return on average common shareholders' equity -33.95% 6.23% 15.97% 5.85% 13.60%  -3.82% 18.68%
 Return on average tangible common equity (2) -43.36% 7.91% 20.36% 7.57% 17.70%  -4.86% 24.71%
 Net interest margin 6.22% 5.51% 5.69% 4.27% 4.37%  5.81% 4.37%
 Efficiency ratio (1) 189.7% 80.8% 66.8% 113.5% 67.3%  106.4% 66.6%
          
 (1) Efficiency ratio is calculated by dividing noninterest expense less transaction-related costs by the sum of net interest income and noninterest income, less gains or losses on sale of securities.
          
 (2) See reconciliation of non-GAAP measures
  


Loan Concentrations

The top ten commercial loan concentrations as of September 30, 2022, were as follows:

  % of
  Commercial
(Dollars in millions)AmountLoans
Solar electric power generation$69.9 32%
Power and communication line and related structures construction 47.5 22%
Lessors of nonresidential buildings (except miniwarehouses) 16.7 8%
Other activities related to real estate 9.8 4%
Hotels (except casino hotels) and motels 8.5 4%
Commercial and Industrial Machinery and Equipment 8.1 4%
Lessors of residential buildings and dwellings 5.5 3%
Lessors of other real estate property 5.1 2%
Other heavy and civil engineering construction 4.3 2%
All other amusement and recreation industries 3.0 1%
 $178.4 82%
   


Reconciliation of Non-GAAP Measures

 9/30/226/30/223/31/2212/31/219/30/21   
   (Dolars in thousands except book value per share)   
Tangible book value per common share        
Total IFH, Inc. shareholders' equity$84,317 $92,543 $91,324 $88,573 $87,312    
Less: Goodwill 13,161  13,161  13,161  13,161  13,161    
Less Other intangible assets, net 5,848  6,014  6,180  6,400  6,569    
Total tangible common equity$65,308 $73,368 $71,983 $69,012 $67,582    
         
Ending common shares outstanding 2,261  2,249  2,235  2,198  2,204    
Tangible book value per common share$28.88 $32.62 $32.21 $31.44 $30.76    
         
 Three Months Ended Year-To-Date
(Dollars in thousands)9/30/226/30/223/31/2212/31/219/30/21 9/30/229/30/21
Return on average tangible common equity        
Average IFH, Inc. shareholders' equity$88,043 $90,721 $90,441 $86,549 $85,683  $89,735 $81,969 
Less: Average goodwill 13,161  13,161  13,161  13,161  13,161   13,161  13,161 
Less Average other intangible assets, net 5,958  6,123  6,341  6,511  6,679   6,141  6,829 
Average tangible common equity$68,924 $71,437 $70,939 $66,877 $65,843  $70,433 $61,979 
         
Net income (loss) attributable to IFH, Inc.$(7,533)$1,409 $3,562 $1,276 $2,937  $(2,562)$11,455 
Return on average tangible common equity -43.36% 7.91% 20.36% 7.57% 17.70%  -4.86% 24.71%


Contact: Eric Bergevin, 252-482-4400


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